Is it realistic to design a 100% rule based system that will make you money every month?

Dmitry8 said:
Hi guys,

Several years ago I was caught up in this "trading for a living is easy" nonsense. Long story short, being young and naive I just did not understand the fact that this "anyone can trade for a living" BS is too good to be true.

It took me years of trial and error to realize just how BS it is. Maybe I am a very stubborn person. Most of the time I was backtesting and forward-testing certain principles, but I have also traded live for about 8 months based on a so-called discretionary approach. I lost money, but not too much.

After trading live, I continued trying to find and filter through bits and pieces of information on trading. I was backtesting and forward-testing strategies/principles again, this time 100% rule based ones. I managed to get significant P/L in some of my tests, but it was not consistent over time. In summer 2023, my inner voice was already telling me on a daily basis that it is time to stop, and I did.

Also, just before I stopped, I came across a relatively simple 100% rule based BREAKOUT system that someone designed for Forex markets. The guy showed a backtest of the BREAKOUT system and it had a significant P/L, BUT there was a major problem with it. It would make money for long periods of time relatively consistently but would then become a BREAK-EVEN system for over a year (i.e. neither making nor losing significant money during that time, ignoring trading costs). This was a Forex system, and this person stated that the reason why this BREAKOUT system would not make money for such a long period of time is because there was a "volatility crunch", where there was a sharp non-steady drop in Forex market volatility that lasted for a long period of time. This sudden drop in volatility was around year 2013/2014 and affected all major currency pairs.

So, based on everything I did over years and what this guy presented, I made a solid conclusion that the concept of "trading for a living", where you are making money every month, either a) does not exist or b) exists but not easy to achieve. The reason I am still not 100% convinced that it does not exist is because I am thinking you can have a system where you trade more than 1 strategy, over more than 1 asset classes, using short timeframes. Mathematically, this should shorten the periods of time where you are not making money. But the question is how short can these periods of time become... I understand that IF it is possible to achieve consistent profitability (where you are making money every single month but not necessarily every week for example) you surely need a lot of knowledge in mathematics/statistics and programming at the very least, as well as fundamentals, depending on the asset class.

Anyway, the question is in the title. Is it realistic? Has anyone here achieved this and what did it take you in terms of time and knowledge?

Going back to trading after not achieving anything in it in such a long time would probably be self-destruction. But I am not planning it, unless someone convinces me with clear logical arguments that it is worth doing.

I would really appreciate some responses.

P.S. To those who are new to trading and thinking that it can be easily done for a living, all I will say is - there are LOADS of bad people in the world who are cowardish enough to harm other people's lives for financial gain, while operating within the law.
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Hello Dmitry8,

Your questions is valid.

I have no answer, because I do not know anyone who trades for a living.
 
SimpleMeLike said:
Hello Dmitry8,

Your questions is valid.

I have no answer, because I do not know anyone who trades for a living.
More...

You ARE a real passive-aggressive mother fucker, aren't you. Seriously?

You, Mr. Master trader of the ES who takes money from all of the peons, has no advice for this lackey? YOU who claim to have now taken THOUSANDS, MINIMAL, from the ES?

You claim, on every thread you can stake your penis upon, that you are the master of the ES market, and you can do no wrong. In the same fucking breath...

"I have no answer, because I do not know anyone who trades for a living..".

I could make this a stupid question, and ask something like...: For how long has my journal been on this website? So much for YOUR cred. Faker.

 
@Dmitry

I came across a relatively simple 100% rule based BREAKOUT system that someone designed for Forex markets. The guy showed a backtest of the BREAKOUT system and it had a significant P/L, BUT there was a major problem with it. It would make money for long periods of time relatively consistently but would then become a BREAK-EVEN system for over a year (i.e. neither making nor losing significant money during that time, ignoring trading costs). This was a Forex system, and this person stated that the reason why this BREAKOUT system would not make money for such a long period of time is because there was a "volatility crunch", where there was a sharp non-steady drop in Forex market volatility that lasted for a long period of time. This sudden drop in volatility was around year 2013/2014 and affected all major currency pairs.

I can relate to what you say above. I currently daytrade futures and have always traded trends. so everything that I say here is based on my daytrading trends experience. I define volatility in terms of trends. when volatility increases it produces longer trends. when volatility decreases, the trends get shorter and shorter and finally price action turns into chop.

In my experience there have been 3 periods where volatility and its trends were great for daytrading. The tech bubble at the end of the 90’s. The financial crisis of 2008-2010 and covid 2020-2022. The tech bubble, I didn’t recognize when volatility changed and lost a bundle. During the financial crisis, I switched to currencies and my profits were very consistent. The last was covid and I recognized it early and again my profits were very consistent due to the longer trends. in between these 3 periods, my profits were inconsistent.

about 5 years ago, I started looking for ways to improve profit consistency during times of lower volatility/shorter trends. I recognized that I should focus on futures that have good volatility/trends. I chose metals and energies and currently trade gold, natty and crude. i continue to look at trading copper and silver, but right now silver is too choppy and copper trends are too short to trade. copper was my favorite over gold, until it wasn’t. The second thing that I did was to change my daytrading process so it adusts for volatility changes. This works within a limited set of parameters and if a future doesn’t meet those parameters, I stop trading it. An example is when I stopped daytrading copper and silver.

The bottom line is that I am more consistent today than I have ever been due to picking the right futures contracts to trade and adjusting for volatility/trending.

toucan
 
Last edited:
toucan said:
@Dmitry

I came across a relatively simple 100% rule based BREAKOUT system that someone designed for Forex markets. The guy showed a backtest of the BREAKOUT system and it had a significant P/L, BUT there was a major problem with it. It would make money for long periods of time relatively consistently but would then become a BREAK-EVEN system for over a year (i.e. neither making nor losing significant money during that time, ignoring trading costs). This was a Forex system, and this person stated that the reason why this BREAKOUT system would not make money for such a long period of time is because there was a "volatility crunch", where there was a sharp non-steady drop in Forex market volatility that lasted for a long period of time. This sudden drop in volatility was around year 2013/2014 and affected all major currency pairs.

I can relate to what you say above. I currently daytrade futures and have always traded trends. so everything that I say here is based on my daytrading trends experience. I define volatility in terms of trends. when volatility increases it produces longer trends. when volatility decreases, the trends get shorter and shorter and finally price action turns into chop.

In my experience there have been 3 periods where volatility and its trends were great for daytrading. The tech bubble at the end of the 90’s. The financial crisis of 2008-2010 and covid 2020-2022. The tech bubble, I didn’t recognize when volatility changed and lost a bundle. During the financial crisis, I switched to currencies and my profits were very consistent. The last was covid and I recognized it early and again my profits were very consistent due to the longer trends. in between these 3 periods, my profits were inconsistent.

about 5 years ago, I started looking for ways to improve profit consistency during times of lower volatility/shorter trends. I recognized that I should focus on futures that have good volatility/trends. I chose metals and energies and currently trade gold, natty and crude. i continue to look at trading copper and silver, but right now silver is too choppy and copper trends are too short to trade. copper was my favorite over gold, until it wasn’t. The second thing that I did was to change my daytrading process so it adusts for volatility changes. This works within a limited set of parameters and if a future doesn’t meet those parameters, I stop trading it. An example is when I stopped daytrading copper and silver.

The bottom line is that I am more consistent today than I have ever been due to picking the right futures contracts to trade and adjusting for volatility/trending.

toucan
More...
I have seen similar research and conclusions on Youtube at TheTransparentTrader.

But his backtesting of strategies is normally broad, by which he applies each strategy to multiple forex pairs through the same time period. He finds that firstly, yes, TA-based mechanical strategies applied to a single pair eventually degrade and become losers. But his tests on other pairs shows that as performance degrades on several pairs, it is simultaneously improving on several others. While other strategies on these same pairs are moving oppositely.

This suggests fluctuation of perfomance is due to unpredictable performance probabilities of the strategy itself, not changing market conditions.
 
tomorton said:
I have seen similar research and conclusions on Youtube at TheTransparentTrader.

But his backtesting of strategies is normally broad, by which he applies each strategy to multiple forex pairs through the same time period. He finds that firstly, yes, TA-based mechanical strategies applied to a single pair eventually degrade and become losers. But his tests on other pairs shows that as performance degrades on several pairs, it is simultaneously improving on several others. While other strategies on these same pairs are moving oppositely.

This suggests fluctuation of perfomance is due to unpredictable performance probabilities of the strategy itself, not changing market conditions.
More...

each future that i trade tends to expand/contract trends over time, so i run my volatility/trending algo on the past 10 trading days on a regular basis, then adjust my trading process accordingly and it provides more consistent profits.
 
Dmitry8 said:
Hi guys,

Several years ago I was caught up in this "trading for a living is easy" nonsense. Long story short, being young and naive I just did not understand the fact that this "anyone can trade for a living" BS is too good to be true.

It took me years of trial and error to realize just how BS it is. Maybe I am a very stubborn person. Most of the time I was backtesting and forward-testing certain principles, but I have also traded live for about 8 months based on a so-called discretionary approach. I lost money, but not too much.

After trading live, I continued trying to find and filter through bits and pieces of information on trading. I was backtesting and forward-testing strategies/principles again, this time 100% rule based ones. I managed to get significant P/L in some of my tests, but it was not consistent over time. In summer 2023, my inner voice was already telling me on a daily basis that it is time to stop, and I did.

Also, just before I stopped, I came across a relatively simple 100% rule based BREAKOUT system that someone designed for Forex markets. The guy showed a backtest of the BREAKOUT system and it had a significant P/L, BUT there was a major problem with it. It would make money for long periods of time relatively consistently but would then become a BREAK-EVEN system for over a year (i.e. neither making nor losing significant money during that time, ignoring trading costs). This was a Forex system, and this person stated that the reason why this BREAKOUT system would not make money for such a long period of time is because there was a "volatility crunch", where there was a sharp non-steady drop in Forex market volatility that lasted for a long period of time. This sudden drop in volatility was around year 2013/2014 and affected all major currency pairs.

So, based on everything I did over years and what this guy presented, I made a solid conclusion that the concept of "trading for a living", where you are making money every month, either a) does not exist or b) exists but not easy to achieve. The reason I am still not 100% convinced that it does not exist is because I am thinking you can have a system where you trade more than 1 strategy, over more than 1 asset classes, using short timeframes. Mathematically, this should shorten the periods of time where you are not making money. But the question is how short can these periods of time become... I understand that IF it is possible to achieve consistent profitability (where you are making money every single month but not necessarily every week for example) you surely need a lot of knowledge in mathematics/statistics and programming at the very least, as well as fundamentals, depending on the asset class.

Anyway, the question is in the title. Is it realistic? Has anyone here achieved this and what did it take you in terms of time and knowledge?

Going back to trading after not achieving anything in it in such a long time would probably be self-destruction. But I am not planning it, unless someone convinces me with clear logical arguments that it is worth doing.

I would really appreciate some responses.

P.S. To those who are new to trading and thinking that it can be easily done for a living, all I will say is - there are LOADS of bad people in the world who are cowardish enough to harm other people's lives for financial gain, while operating within the law.
More...
You asked the question like someone working for a paycheck.

I have always been a contrarian and travelled off the beaten paths. IMHO, I suggest you ask a different question: how do I maximize my returns? If high enough it is OK to be only occasionally profitable.

A high end realtor may only sell 1-2 trophy houses a year but the commissions are more than enough to compensate for the lean months in between....
 
Took me several years to trade/develop long term futures system where most months small gains/loses occur and few months where many markets are moving positive. It is an ongoing method exploring ways of hedging to get risk to zero.

Swing trading took about same amount of time with less losing months once I added hedging.

Scalping took ten years to be consistently profitable and another ten years every week and now automated. Both of them are incredible little amount of rules and trend is not considered.

What most never consider is time or effort put into trading business as I would work 70 hours a week for a decade. Most would never consider giving up vacations.
 
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